Finding Claimants and Paying Them: The Creation and Workings of the. International Commission on. Holocaust Era Insurance Claims

Transcription

1 Finding Claimants and Paying Them: The Creation and Workings of the International Commission on Holocaust Era Insurance Claims Lawrence S. Eagleburger and M. Diane Koken with Catherine Lillie Published in 2007 by the National Association of Insurance Commissioners in Partnership with the International Commission on Holocaust Era Insurance Claims For more information please visit and

2 EXECUTIVE SUMMARY The fall of the Berlin Wall in 1989 made it easier to explore the fate of the unclaimed assets of Holocaust victims and to bring a measure of justice to survivors and their heirs. In the Cold War era, thousands of Holocaust era insurance policies had gone unpaid or unclaimed because potential claimants could not gain access to records and file claims with relevant companies or government authorities. With a new era in Eastern Europe and declassification of certain U.S. war-time intelligence records, previously undocumented stories could be verified, and people who had been precluded from filing claims could seek restitution. In the 1990s, U.S. insurance regulators sought the most effective means to address issues raised by Holocaust survivors seeking the proceeds of unpaid pre-war life insurance policies. The insurance regulators recognized that for the highly sensitive and emotionally charged issue of Holocaust era assets, the litigation route presented significant barriers, given the understandable challenge of documentation, the length of time that had passed, and the effort and costs involved. Thus, regulators explored routes other than litigation to resolve unpaid claims. By conducting interviews, researching the historical background, and organizing informational hearings across the country, the National Association of Insurance Commissioners (NAIC) sought to better understand the issues raised by potential claimants. Working through its U.S. insurance regulator members, the NAIC then identified the companies most likely affected and worked with those companies to arrive at a means of resolving the conflict outside the courts. With a better understanding of the defining characteristics of pre-war life insurance markets in Europe as well as the geographic limitations and procedural shortfalls of prior compensation programs, U.S. regulators, European companies and Holocaust survivor representatives from around the world created a memorandum of understanding that established the International Commission on Holocaust Era Insurance Claims (ICHEIC) in August The Commission selected former U.S. Secretary of State Lawrence S. Eagleburger as its chairman. Working largely by consensus, ICHEIC established processes to identify claimants, locate unpaid insurance policies, and assist Holocaust survivors and their families in resolving claims. Survivors and their heirs, most of whom could provide no documentation beyond anecdotal information, were able to submit claims to insurers and partner entities, at no cost. ICHEIC, in close cooperation with 75 European insurance companies and a number of partner entities, resolved more than 90,000 claims. To build on the information provided by claimants, ICHEIC conducted archival research to locate documents related to Holocaust era life insurance policies. Working with all available relevant archives in 15 countries, ICHEIC researchers located almost 78,000 policy specific records. This research was used by ICHEIC s members to augment the often limited information provided with claims. Working closely with European insurance companies, ICHEIC established protocols that ensured that information provided by claimants was matched to all available and relevant surviving records in the companies possession. 1

3 Claims that identified the issuing company were sent to that company or its present day successor. Claims on policies written by Eastern European companies that were nationalized or liquidated after the war and have no present day successor were reviewed and settled via ICHEIC s in-house process. To ensure the broadest possible reach, anecdotal claims that did not identify a specific insurance company were circulated to all companies that did business in the policyholders country of residence. Having located unpaid policies, ICHEIC s settlement process determined present values based on negotiated guidelines that provided historical currency conversions. Anecdotal claims which, despite ICHEIC s relaxed standards of proof and its research efforts, could not be linked to a specific policy were reviewed through ICHEIC s humanitarian claims process. ICHEIC s mission to identify and compensate previously unpaid insurance policies defined the Commission s structure. Participants established processes to locate claimants and identify unpaid Holocaust era policies, and created a series of rules and guidelines to ensure that claims were settled equitably. The Commission s oversight structure provided for a series of checks and balances. In addition to financial oversight, agreements called for independent third-party audits of claims review and decision-making processes of participating companies and partner entities. Claimants who sought a second review for decisions rendered in their individual claims could participate in a separate appeal system. The claims process was comprehensive in terms of participants, those it served, and how it addressed historical, legal and operational complexities. It was a comprehensive process, but it was about people and about justice. Consider, for example, George Sachs, the only member of his family to survive the Holocaust, but without documents at war s end. He remembered efforts to secure payment on his father s life insurance after his father was killed in Gestapo custody in Not until the creation of the International Commission on Holocaust Era Insurance Claims, almost 60 years to the day of his father s death, did Mr. Sachs find an avenue to collect on these policies and seek some form of justice. Mr. Sachs and claimants like him were the driving force behind the creation of ICHEIC. Their stories of personal tragedy and frustrated attempts to recover assets illustrated the urgent need to bring full closure to outstanding claims. Through ICHEIC s efforts, a total of $306 million was offered to 48,000 Holocaust survivors and their heirs. More than half of this amount was awarded on policies located as a result of ICHEIC s archival research, successful matching of claimants to policy information, and the Commission s humanitarian claims processes. The Commission also committed more than $169 million for humanitarian programs, such as social welfare benefits (including healthcare and home-services to assist recipients with basic daily tasks) that benefit Holocaust survivors worldwide. 2

4 SECTION 1 Introduction: Mission Drives Commission Find Claimants And Pay Them For 60 years following the end of World War II, thousands of Holocaust era insurance policies had gone unpaid or unclaimed. George Sachs story illustrates how and why. Born in Prague, Czechoslovakia, Mr. Sachs lived there with his parents and older brother until A neighbor falsely accused them of hoarding food and denounced them to the Gestapo. Mr. Sachs parents were taken into custody. His father was found drowned in the river Moldau two months after his arrest, with bruises indicating torture; his mother was released from Pankrac prison in Prague one month later. The family was not permitted to investigate his father s death. Mr. Sachs remembers their fruitless efforts to secure payment on his father s life insurance in 1939, submitting the policy and the death certificate. Mr. Sachs was sent to a concentration camp with a small suitcase of clothes and no other possessions. Imprisoned first in Theresienstadt, then Zossen and subsequently Schnarchenreuth, he was the only member of his family to survive the Holocaust; his mother died in 1942 and his older brother was killed in Theresienstadt in late At the time of liberation, all he owned were the tattered rags on his back and a threadbare blanket. A young adult when the war started, Mr. Sachs knew a little about his parents financial affairs. But without documents, at war s end, he had only his memories, and thus no means to prove what was rightfully his. He moved to the United States, built a new life for himself, but never forgot his father s efforts to provide for the family. On a trip to Europe in 1990, he tried without success to settle his father s unpaid policy directly with RAS, his father s insurer. In 1998, he tried filing a claim with the Holocaust Claims Processing Office, established by New York state. The U.S. regulators viewed Mr. Sachs and claimants like him as the reason for creating the International Commission on Holocaust Era Insurance Claims (ICHEIC). Their stories of personal tragedy and frustrated attempts to recover their assets illustrated the need for an exhaustive review, and a fair and just resolution of outstanding claims. Renewed interest in the pre-war European insurance market and the fate of Holocaust era life insurance policies was sparked by the end of the Cold War in This event allowed access to records and people in Eastern Europe, and the increased declassification of war-time intelligence documents in U.S. archives. Previously undocumented stories could be verified, and people who had been precluded from filing insurance claims could seek restitution. In response, the German government revisited past compensation programs and made restitution and indemnification for suffering sustained at the hands of the Nazi regime available to residents of the former Eastern Bloc. 3

5 Recognizing that litigation was a costly, time-consuming and often inadequate means of settling claims, U.S. insurance regulators via the National Association of Insurance Commissioners (NAIC) sought to find an alternative means. 1 By conducting interviews, studying the past, and organizing hearings across the country, the NAIC (through its U.S. insurance regulator members) sought to better understand the issues raised by potential claimants, identify the companies most likely affected, and work with those companies to arrive at a means of resolving claims outside the courts. These efforts led to the creation of ICHEIC through a memorandum of understanding signed in 1998 by U.S. insurance regulators, six insurance companies, the Claims Conference, the World Jewish Restitution Organization, and the state of Israel. Through this commission, stakeholders and representatives agreed on a process to identify and ultimately settle valid and previously uncompensated Holocaust era insurance claims at no cost to claimants. Key Points ICHEIC was created to develop a process to identify claimants, locate their unpaid insurance policies, and assist individuals, like Mr. Sachs, in resolving claims. As a result of ICHEIC s efforts, a total of $306 million was offered to more than 48,000 claimants. More than half of this amount was awarded on policies located as a result of ICHEIC s archival research, successful matching of claimants to policy information, and the Commission s humanitarian claims processes. In addition, more than $169 million was committed for humanitarian programs that benefit Holocaust survivors worldwide. ICHEIC s claims process was comprehensive in scope and the people it reached. Holocaust survivors and their heirs, regardless of their location or the type of information (if any) they possessed, were able to submit claims to insurers and partner entities at no cost. ICHEIC s archival research involved 15 countries, and the Commission published these research results, as well as more than 500,000 potential policyholder names. ICHEIC s equitable settlement process determined present values for unpaid Holocaust era policies while simultaneously ensuring that ICHEIC s rules and guidelines were applied consistently. The following chapters summarize the defining characteristics of pre-war life insurance markets in Europe and the geographic limitations and procedural shortfalls of prior compensation programs. We then describe in detail how ICHEIC defined and met its mission: to identify and compensate previously unpaid Holocaust era life insurance policies. 1 The National Association of Insurance Commissioners (NAIC) is the organization of insurance regulators from the 50 states, the District of Columbia and the five U.S. territories. The NAIC provides a forum for the development of uniform policy when uniformity is appropriate. With offices in Kansas City, Missouri, New York and Washington, D.C. the NAIC staff provides support to insurance commissioners. For more information, see 4

6 SECTION 2 Why was ICHEIC needed? Mission: Illustrate that There Are Unpaid Insurance Policies To understand the complexities faced by the Commission in establishing a claims process, it is necessary to appreciate the economic and political situation that existed when claimants families first purchased their policies. In the inter-war period, Europeans turned increasingly to life insurance policies to secure their families financial future, having experienced World War I and subsequent economic upheaval (bookended by hyperinflation and world-wide economic depression). These policies were intended to cover the costs of sons educations, daughters dowries, to secure retirement funds, or cover burial expenses. Multiple policies for the same insured were common. With the exception of a few highly developed insurance markets (such as Austria, Czechoslovakia, and Germany) small values were the norm. The political turmoil following the Great War added another layer of complexity. With the dissolution of the Austro-Hungarian Empire, borders were redrawn to create the new states of Central and Eastern Europe. While people stayed put, countries moved around them and official languages changed, as did currencies. Whereas the Empire s mint had printed bank notes in eight different languages, the new states circulated their own local currencies. An example of how this affected claims is the case of a prominent rabbi s wife, who bought a dowry policy for her daughter in Kerecky, Czecholovakia; by the time this girl was 3 years old, the family lived in Hungary, without ever having left their home. Premium payments previously owed in one currency were now due in another. Historical Background The German and Austro-Hungarian Empires had financed war efforts by printing paper currency. As a consequence, Austria, Germany and Hungary suffered through periods of hyperinflation between 1919 and Germany faced the most severe situation. By 1923, a postage stamp cost what a villa in a fashionable quarter of Berlin had cost in Salaries, paid twice a day, had to be collected in wheelbarrows. 2 The victorious Allied powers sought to stabilize the currencies and economies of the countries most deeply affected. The mid- to late 1920s saw a period of relatively short-lived prosperity. The crash of the New York stock market in 1929 was followed by global economic depression, de-stabilizing the financial sector in Central and Eastern Europe, beginning with the collapse of the Austrian Creditanstalt in May The 1931 banking crisis ended the availability of new loans and credit on the international financial markets for countries in the region. Across Europe, countries effectively abolished the gold standard. Germany restricted currency convertibility and placed foreign exchange transactions under the aegis of the Reichsbank. Other countries adopted similar measures in an effort to stem further capital flight. 2 Gordon Craig, Germany, (New York: Oxford University Press, 1980), pp

7 The European Insurance Industry Between The Wars Given the economic uncertainty of the period, the purchase of term life insurance policies (and related products, such as dowry and endowment insurance) became a primary method of savings for many people in Europe during the inter-war years, though not always a successful one. The case of an Austrian claimant illustrates this well. Her father bought a policy for 10 million Austro-Hungarian crowns from Magyar-Franczia, a Hungarian insurer; by 1927, the policy was worth only a tiny fraction of the original amount. Given this experience, insurance denominated in hard foreign currencies (or gold) sold by foreign insurance companies seemed to provide a security lacking in national currencies and/or national banks. Unlike foreign banks, agents for foreign insurance companies were readily accessible. The Italian insurers Assicurazioni Generali and Riunione Adriatica di Sicurtà, both based in Trieste, had a particular competitive advantage in the territories of the former Austro-Hungarian Empire, as did Vienna-based companies such as Anker and Phönix, and as a result had a large share of the insurance market in Czechoslovakia, Hungary, and parts of Poland. German insurance companies, such as Victoria zu Berlin, had a sizable presence in the Balkans and in Czechoslovakia, as well. Germany The German insurance industry went through a period of consolidation during the 1920s and 1930s. By the end of this period, the German market was dominated by a few very large companies (with many differently-named subsidiaries), large numbers of policies sold, and premiums primarily denominated in Reichsmarks. Austria Insurance companies based in the great cities of the Empire (Vienna, Prague, Budapest, Trieste) had grown accustomed to seeing the entire Empire as their natural sales territory, with shared principles of insurance, regardless of territorial, linguistic, or ethnic differences among their customers. After the breakup of the Empire, Austrian companies faced competition from new companies in newly independent states. The Austrians and Czechs signed a bilateral agreement in Prague that was finally ratified in 1927, which permitted Austrian companies to sell insurance in the Czechoslovak Republic. 3 Although the insurance industry was generally less unstable than the banking industry, an exception was the Austrian Phönix insurance company, which collapsed in February Because Phönix was the third largest company in Europe and did business in 22 countries, its collapse caused major upheavals in the insurance industry across the continent. The Austrian state stepped in to 3 Miroslav Marvan and Alois Moser, Die Neuordnung der versicherungswirtschaftlichen Beziehungen, 1918 bis 1927 in Teichova and Mathis, Österreich und die Tschechoslowakei, p

8 SECTION 2 liquidate the financial side of Phönix; it also required that the Austrian business community (and some prominent foreign insurance companies, such as Generali and Munich Re) participate in the formation of a successor company called Österreichische Versicherungs-AG (ÖVAG). As for Phönix s many foreign operations, various countries dealt with the situation in different ways; in Germany, a new company, Isar Lebensversicherungs AG, was established to take over Phönix life insurance policies. In Czechoslovakia and Hungary, the state and the insurance industry combined to consolidate the assets of the Czech and Hungarian branches of Phönix. Czechoslovakia In 1925 (before the insurance agreements between Austria and the Czechoslovak Republic) there were a total of 23 domestic and 13 foreign companies selling life insurance in Czechoslovakia. Phönix was the second largest, behind only the domestic Slavia. 4 Before the German occupation of the Sudetenland in October 1938, the only German company with a significant presence was Concordia. The rest of the Sudetenland s insurance business consisted mostly of small, local Sudeten-German companies and branches of the larger Czech companies based in Prague. In November 1938, the local Sudeten companies joined to form the Sudetendeutsche Union Versicherungs AG and proposed, along with Concordia, to take over and split the portfolios of Czech companies in the area. They did not remain alone in the market, however; other German companies were permitted to operate in the Sudenteland and to purchase the portfolios of Czech companies. 5 After the German occupation of Bohemia and Moravia on March 15, 1939, the administration of the Protectorate proclaimed in June 1939 that all policies signed prior to October 10, 1938, in the territory of the former Czechoslovakia (minus the Sudetenland) were the responsibility of the insurance companies in the Protectorate, provided their headquarters had been established in the protectorate prior to December 31, 1938, and the insured person or property was also in the protectorate prior to this date. 6 Finally, insurance contracts that were in territories then ceded to Hungary, Poland, or the newly independent Slovak state were separated from those held in the Protectorate. 4 Ibid. p Ibid, pp Tomas Jelinek, Insurance in the Nazi Occupied Czech Lands: Preliminary Findings, Proceedings of the Washington Conference on Holocaust-Era Assets, November 30-December 3, 1998, p

9 Hungary In , there were 36 insurance companies listed as doing business in Hungary, a number somewhat reduced from pre-war levels, due to the large number of British insurance companies no longer able to operate in the country. Once Hungary declared war on Britain, the offices of these companies were closed and their assets transferred to the remaining companies (mostly Austrian and German, with two Italian companies, Assicurazioni Generali and RAS, also prominent). 7 Poland The Polish insurance market in 1939 was comparatively small, a result of Poland being a largely agrarian country with a less developed market: 79 companies, of which 52 sold some form of reinsurance, 15 were joint-stock companies, five were publicly owned, not including the PKO (the postal savings bank) which also participated in the insurance market, and six were foreign firms. Of the foreign companies, two were English (Alliance and Prudential), two were Italian (Assicurazioni Generali and RAS), and two were German (Bayerische and Aachener & Münchener). Confiscation of Assets Not long after the Nazi seizure of power in Germany in January 1933, the authorities began programmatically plundering and confiscating Jewish assets. The process began most quickly in Germany, but was carried out in every country occupied by the Germans (and in the territories of many of its allies.) The initial confiscations tended to be largely indirect: Jews were forbidden to practice their professions and subject to punitive taxation. Many policyholders cashed in insurance policies (and other financial assets) to make payments on bills or taxes that were mandated before they could emigrate. Often, the proceeds of these repurchased insurance policies were either transferred directly to the relevant government finance offices or placed into blocked accounts that were subsequently seized by the government. One historian estimates that most German Jews holding insurance had cashed in their policies prior to By 1941, the focus shifted from indirect to direct confiscation: the 11th Decree of the Reich Citizenship Law made banks and insurance companies liable for reporting assets owned by emigrants and the value of insurance policies held by Jews remaining in Germany. It also mandated the 7 Dr. Tamás Földi, Insurance Claims in a Historical Context with a Special Regard to the Holocaust in Hungary, Proceedings of the Washington Conference on Holocaust-Era Assets, November 30- December 3, 1998, p Professor Gerald Feldman, in Confiscation of Insurance Assets, Special Issues, Proceedings of the Washington Conference on Holocaust-Era Assets, November 30-December 3, 1998, p

10 SECTION 2 confiscation of blocked accounts in the name of all who had left the Reich (a definition that included those who had been deported to camps). A subsequent decree of 1943 stipulated that the assets of deceased Jews also would be the property of the Reich. Despite the reporting requirements, it is unclear whether companies were actually able to comply with this mandate, considering that in 1941, 89 insurance companies operating within the German Reich were responsible for a total of 5 million insurance policies. Many faced severe manpower shortages that made it difficult to go through their records to identify Jewish policyholders. Instead, it is likely that the Gestapo gathered lists of policyholders and policy numbers from the declarations of Jewish assets 9 and forwarded these to the companies for the calculation of repurchase values now owed to the state. 10 The plunder of assets took similar forms in Austria and the Protectorate of Bohemia and Moravia. Insurance policies were either directly confiscated, or repurchased by their owners with the proceeds going into blocked accounts that were, as in the German case, subsequently seized by Nazi authorities. The Germans also began the direct confiscation of assets belonging to all those who had emigrated, regardless of whether they had left before or after the German occupation. Those who were unable to emigrate had to sign over the rights to all their property, including the proceeds of insurance policies. Slovakia, a nominally independent puppet-state, also adopted the German practice of requiring Jews to fill out asset declarations (including insurance policies), which were used to target assets for seizure after their owners had, in most instances, been sent to their deaths. Hungary, which was not directly occupied by the Germans until 1944, had a slightly different trajectory. Laws restricting the role of Jews in professions and the economy and identifying Jews in racial (rather than religious) terms were passed in May 1938 and May 1939, but Jewish citizens were still able to hold, repurchase and pay premiums on insurance policies until fairly late in the war. The situation in Poland was more complex; half the country was occupied by the Soviets from September 1939 until June The Soviets carried out seizures and confiscations from Poles and Jews alike based on the principle of class warfare; thus many individuals had already lost many of their assets by the time the Germans arrived. In German-occupied Poland, the practices of spoliation, seizure, and murder were adopted from the beginning of the war. As for Western Europe, the authorities in occupied France, Belgium, and Luxembourg issued laws in 1941 and 1942 providing for the seizure of Jewish assets belonging to those who had emigrated or fled. 9 Jews resident in Germany and Nazi occupied countries were required to report their assets in excess of RM 5,000. Some allies of the German regime also introduced similar asset reporting requirements. 10 Feldman, in Proceedings of the Washington Conference, p

11 Post-war Nationalization of Insurance Industry in Eastern Europe In the newly Communist states of Eastern and Central Europe (Poland, Czechoslovakia, Romania, Hungary, Bulgaria) nationalization of private enterprises, including insurance companies, began almost simultaneously with liberation by the Red Army. As a result, insurance companies lost control of their assets and claimants were largely precluded from making claims on pre-war policies. The speed and mechanics of nationalization varied by location, but the effect for claimants was the same, as the following examples illustrate. Hungary In Hungary, nine German- and Austrian-owned insurance companies (including the Hungarian branches and subsidiaries of Allianz, Anker and Victoria) were taken over in 1945 by the Russianowned Hungarian-registered East European Insurance Company. The East European Insurance Company was transferred to the Hungarian state in 1954 and eventually merged into the Hungarian State Insurance Company. In 1950, the insurance and real estate holdings of the two Italian insurers, RAS and Generali, were liquidated and seized by the Hungarian government. 11 For claimants such as George Gottlieb, however, such events made no practical difference. George, then 15 years old, had been told by his older brother that their father had a life insurance policy written by Generali Trieste. Mr. Gottlieb s brother (later killed at Auschwitz) had been a student at the Italian Secondary School in Budapest before the war; the family had business and personal ties to Italy, and Mr. Gottlieb can remember his parents trips to the French Riviera with detours to Trieste for business. In retrospect, he presumes these detours were for business with Generali. The only related item that survived the war was a letter from his father, hidden in a jar at the bottom of a well, in which he summarized his assets. Unfortunately, by the time Mr. Gottlieb was able to retrieve it, the seal had leaked. He had no means to document his family s policy and, until the Commission was created, no effective way to assert a claim. Poland In Poland, private insurance agencies, some already in liquidation, lost their right to conduct business in Only two pre-war insurance companies (Warta and the PZU) were given licenses to conduct business, although they were both nationalized. The PZU, the Polish State Insurance Institute, took over the management and property of the liquidated insurance companies. The policyholders of the English insurers Alliance and Prudential and of the Italian insurers Generali and RAS 11 Dr. Tamás Földi, Proceedings of the Washington Conference, pp

12 SECTION 2 were told to contact the headquarters of these companies in London, Trieste, and Milan respectively, although this proved futile. Eventually, in the 1960s, the Polish state covered payments to current policyholders of these companies, provided that the policyholders still resided in Poland. 12,13 A claimant in New York, originally from Poland, was a 5-year old boy when the Nazis invaded. During the next six years, his grandfather, mother, and nearly every other member of his family perished in the Warsaw ghetto and the Nazi death camps. The boy survived and was reunited with his father at the end of the war. In 1947, his father contacted Riunione Adriatica di Sicurta about the policies of his deceased father-in-law. He was informed that by decree of the Polish government, he should submit his application to the PZU instead. Nothing further came of his inquiries. Czechoslovakia Czechoslovakia, in 1948, was the last country in Eastern and Central Europe to become a one-party state. At this time, private insurance companies were nationalized and insurance was administered by a state authority. Payments to policyholders were blocked until 1953 when they were officially cancelled. 14 A New York claimant originally from Czechoslovakia encountered the nationalization argument when she approached Der Anker in Vienna in 1994 with her policy, issued by the Czech branch of this Austrian insurer. She had discovered her dowry policy and premium receipts inside a book belonging to her deceased father, a rabbi whose library had been scattered during the war. It was pure chance that this book had survived and the rabbi s daughter had recovered it. Despite the fact that she was able to provide both the policy and premium receipts as proof of payment until 1944, Der Anker referred her to the Czech government as the appropriate successor of the company s nationalized Czech interests. Agreements with the United States After Joseph Stalin s death in 1953, some East European governments concluded agreements with the United States and other Western countries to compensate for losses suffered by former nationals now living in the West. These agreements provided for lump sum payments by the governments of these countries to the Western government in question; the former property-owners then applied to their own governments for redress. Although some Jewish insurance policy holders received pay- 12 Elzbieta Turkowska-Tyrluk, Proceedings of the Washington Conference, p Based on Prudential s surviving records, 4,623 policies were in force in Poland at the outbreak of World War II. Over 36% of these policies have been settled since the early 1950s despite significant gaps in Prudential s records. Policyholders or relatives of former policyholders who believe they have a valid claim can contact Prudential directly; details regarding the claims process can be found at 14 Vojtech Mastny, The Impact of Post-World War II Nationalizations and Expropriations in East Central Europe on Holocaust-Related Assets, in Proceedings of the Washington Conference, pp

13 ments through these plans, the lump sums provided by the East European governments were often not large enough to compensate adequately for the property lost. A Czech Holocaust survivor who fled to the United States in 1939 attempted to claim the proceeds of his Czech insurance policies from the U.S. government s Foreign Claims Settlement Commission (FCSC) in the early 1960s. His claims were recognized as valid; the five insurance policies were compensated at a significantly reduced exchange rate. It was left to his son to apply for the full value of the policies through ICHEIC 40 years later. Restitution of Insurance Assets Allied Legislation The January 1943 Inter-Allied Declaration Against Acts of Dispossession Committed in Territories Under Enemy Occupation or Control established the principle on which postwar restitution would be carried out. Under this declaration, the transfers of property, rights, and interests carried out by the Nazis would be considered to be invalid, whether such transfers or dealings have taken the form of open looting or plunder, or of transactions apparently legal in form, even when they purport to be voluntarily effected. 15 In July 1949, the Office of the Military Government United States Area of Control (OMGUS) issued Law No. 59, which addressed the issue of confiscated property and general provisions on restitution. Holocaust survivors filed claims under Law No. 59, but the German post-war restitution process was carried out by the government of the Federal Republic of Germany (formed in 1949 from the zones of pre-war Germany occupied by Britain, France, and the United States). Luxembourg Treaty The Luxembourg Treaty of 1952 between the Federal Republic and the state of Israel provided for the establishment of the Conference on Jewish Material Claims Against Germany (Claims Conference), to which the Federal Republic pledged 450 million Deutsche Marks. In addition, the Federal Republic agreed, as successor to the National Socialist regime, to provide the state of Israel with 3 billion Deutsche Marks in goods over the course of the next years. Payments to Israel, particularly in the form of goods, recognized that Israel bore a tremendous financial burden in providing for the many victims of Nazi persecution who had settled there. Monetary payments to the Claims Conference were designed to aid Jewish organizations throughout the world in resettling Jews. Furthermore, the Federal Republic agreed to pass laws to compensate individuals and their heirs and Jewish organizations for several categories of loss. 15 Inter-Allied Declaration Against Acts of Dispossession Committed n Territories Under Enemy Occupation or Control, January 5,

14 SECTION 2 German Federal Compensation Law The first federal compensation law, the Supplementary Federal Law for the Compensation of the Victims of National Socialist Persecution, was passed in 1953, and followed by the Federal Law for the Compensation of Victims of National Socialist Persecution (Bundesentschädigungsgesetz - BEG) of 1956, which substantially expanded the scope of the 1953 law. The Final Federal Compensation Law enacted in 1965 increased the number of persons eligible for compensation, as well as the assistance offered. The BEG laws compensate individuals persecuted for racial, religious, or ideological reasons and also apply to persons who were persecuted because of their nationality. The laws focus on payments for physical injury and damage to health, restrictions on personal freedom, harm to economic and professional growth, and damage done to personal property. They include provision for compensation to artists and scholars whose work disagreed with Nazi tenets, and to people who were persecuted because they were related to or friendly with victims of the Nazis. Finally, they guarantee assistance to the survivors of the deceased victims. German Federal Restitution Law Property that had belonged to victims of racial and political persecution was returned to former owners and, in cases where owners had perished, to heirs or successor organizations. For objects that no longer existed in their original state and could not be returned, compensation was paid according to the Federal Restitution Law (Bundesrückerstattungsgesetz BRüG), passed in The BRüG legislation was further developed in four supplementary laws, the last of which was enacted in Compensation for lost property was made according to the estimated replacement value as of April 1, The BRüG legislation was also applicable to property confiscated outside the territory of the Federal Republic of Germany, provided that at the time of confiscation it was brought into or held in territory covered by BRüG legislation. Specific Insurance Asset Compensation Specifically with regard to insurance assets, the German government assumed responsibility for paying out insurance policies (rather than shifting the burden to the insurance companies themselves). Insurance companies holdings in government bonds were rendered nearly worthless by the 1948 currency reform. Because the calculation of insurance benefits under the compensation law was to be made as if the policyholder had continued to hold the policies, 16 the insurance companies would have been required to pay out too many obligations to remain solvent. By 1998, according to figures reported by the German Ministry of Finance, postwar German compensation and restitution programs had paid out billion Deutsch Marks to survivors Unpaid premiums and payments made directly to the policyholder were deducted from compensation, but any payments to government authorities, blocked accounts or seizures were compensated. 17 Rudolph Gerlach, Proceedings of the Washington Conference, p

15 Despite this seemingly comprehensive program of restitution, the post-war German compensation process contained major gaps. First, only citizens of Germany within the boundaries of 1937 could submit claims for property losses (such as insurance) and those losses had to have taken place within those boundaries. 18 This left many Holocaust survivors unable to receive payment under insurance policies they had been forced to liquidate or that had been seized. Moreover, claimants whose losses were sustained in the post-1945 German Democratic Republic were often unable to document their losses and were, therefore, unable to file valid compensation claims. The claim of Eva Slonitz helps illustrate this. Originally from Nordhausen in Thuringia, East Germany, her father, Heinrich Stern, was a lawyer who had 11 insurance policies with a number of different companies. While Eva Slonitz was aware that her father had purchased life insurance, she could not provide documents. The information necessary to confirm these contracts was contained in her father s Holocaust era tax returns. While they had survived, they were locked away in a state archive behind the Iron Curtain. Some policyholders left out by the provisions of the BEG were able to apply for compensation under the German Lastenausgleichsgesetz (LAG), a federal program established to compensate some of the 12 million Germans who had suffered property losses when expelled from Czechoslovakia and Poland at the end of the war. However, because the LAG did not deal with Nazi persecution, former Czech and Polish Jewish policyholders who received LAG compensation received far less than what they would have been entitled to had they met the citizenship requirements of the BEG. 1990s: The Second Act With the end of the Cold War in 1989, Holocaust era asset restitution issues returned to the international agenda. The contrasts in compensation received by survivors or the heirs of victims in Western vs. Eastern Europe were now starkly evident. With the former Eastern Bloc increasingly accessible and residents of the countries formerly behind the Iron Curtain more mobile, additional information became available. 18 Claims for other types of compensation (loss of life, liberty, damage to health, etc.) were not geographically limited in the same way. 14

16 SECTION 2 Unification of Germany led to updated restitution and compensation laws. 19 The resulting increased awareness coincided with document declassification dates in Western archives 50 years after the end of World War II. By 1997, with the publicity surrounding the restitution of Holocaust era assets from Swiss banks, and the Mauerbach sale 20 of looted art, the issue of unpaid insurance policies began to draw increased attention. A growing body of public evidence suggested that several major insurance companies had sold policies to European Jews in the 1920s and 1930s, and that for many of these policies, claims were still outstanding. 21 Initial Company Responses Insurance companies complained that it was unfair to compare them to Swiss banks or, what is worse, Nazi looters. They were vocal in asserting that, unlike the dormant accounts in Switzerland, the insurance issue involved many countries, each with its own specific historical, political, and legal context, not to mention the complexities inherent in insurance itself. Allianz, having been named in a lawsuit in New York in March 1997, established a toll-free helpline with call centers in North America, Europe, and Israel in April 1997 and encouraged potential claimants to contact them directly. Moreover, Allianz hired the accounting firm Arthur Andersen LLP to conduct an independent audit of relevant file inventories, and invited Professor Gerald Feldman of the University of California, Berkeley, to research the company s history and publish his findings. 19 West German compensation laws excluded from eligibility victims of Nazi persecution resident behind the Iron Curtain. In 1990, after German reunification, Germany continued the established West German policy on restitution and made available additional funds for persons who had received little or no compensation due to the circumstances of the Cold War. On May 1, 1992, the Law on Compensation for Victims of National Socialism in the Regions Acceding to the Federal Republic (Gesetz über Entschädigungen für Opfer des Nationalsozialismus im Beitrittsgebiet) was enacted. It supersedes, in a modified version, the compensation legislation of the German Democratic Republic. This law established a framework for the return of assets taken from individuals and associations between January 30, 1933 and In cases where restitution is not possible, compensation will be made for the loss of property in eastern Germany. Part of the regulations applying to people persecuted by the Nazis were negotiated with the Claims Conference and are now set out in the Law on Compensation and Adjustment (Entschädigungs-und Ausgleichsleistungsgesetz), which went into force on December 1, In 1996, Christie s, on behalf of the Federation of Austrian Jewish Communities in Vienna, auctioned more than 8,000 items. Prior to the 1996 sale, the confiscated works of art had been stored for more than 40 years in a 14th century monastery in the Austrian town of Mauerbach, just outside the city of Vienna. The lots, most of which were confiscated from Jewish homes by the National Socialists between 1938 and 1945, included an extensive and varied range of Old Master and 19th century pictures and drawings, as well as carpets, tapestries, furniture, arms and armor, coins, and literature. The Federation of Austrian Jewish Communities established an honorary committee to oversee the distribution of funds from the sale for the benefit of victims of the Holocaust worldwide. 21 Proceedings of the Washington Conference,

17 Initial NAIC Involvement: Creation of a Working Group Insurance companies with U.S. business interests sought conversations with their respective U.S. insurance regulators in an effort to address concerns of Holocaust survivors and their heirs. In midsummer 1997, three NAIC members from Missouri, New York and Washington state reached out to the World Jewish Congress. By September 1997, at a public hearing held at a quarterly NAIC meeting in Washington D.C., the NAIC voted unanimously to establish a Working Group on Holocaust era insurance issues. The Working Group s priorities were two-fold: (1) to investigate and communicate with Holocaust survivors to determine the scope of the problem; and (2) to start a dialogue with European insurance companies to determine how best to establish a process for resolution of these issues. Its mission statement was: To pursue justice on behalf of both victims and survivors of the Holocaust and their heirs, consisting of a full accounting by insurance companies that sold policies to Holocaust victims and survivors, and by fully recovering the insurance policy benefits owed to them. The Working Group recognizes that injustice has gone unanswered for more than a half century. Thus, action must be taken as quickly as possible. This requires careful coordination and strong cooperation among all state insurance departments to accomplish this mission. Twenty-six states 22 and the District of Columbia joined the Working Group and coordinated informational hearings in late 1997 and early 1998 in Washington D.C.; Skokie, Ill.; Chicago; Miami; Seattle; Los Angeles; Philadelphia; and New York City. At the informational hearings, several Holocaust survivors presented firsthand recollections of their parents having bought life, property, or dowry policies. Many of the policyholders had died at the hands of the Nazis. Their children, unable to resolve their insurance claims, were now willing to speak publicly about their experiences both during the war and after, when they sought to redeem what they believed to be rightfully theirs. At the hearing in New York City on President s Day, 1998, one of the survivors spoke eloquently about her parents, their life in pre-war Czechoslovakia, and of her mother s efforts to keep up payments on the dowry policy purchased for her, the baby of the family. She brought with her a copy of her dowry policy and the premium receipts that had survived in one of her father s books, and a photograph of the family in happier times. The hearings were powerful events, with regulators, insurers and potential claimants fighting through emotions to tell their stories and arrive at proposals for further action. The Working Group, having heard from public officials, insurers and Holocaust survivors, determined that the companies most likely affected were also represented in the U.S. insurance market. 23 From the outset, these 22 Arkansas, California, Colorado, Delaware, Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Vermont, and Washington. 23 Allianz, AXA, Generali, Gerling, Basler, Swiss Re, Winterthur, and Zurich. 16

18 SECTION 2 companies acknowledged an obligation to review survivors claims. The call to recognize a legal obligation was met with resistance, however, as were the regulators requests to review the companies books and records, and to release policyholder names from the relevant period. In February 1998, however, Allianz agreed to provide access to the company s books and records, provided it could be done under the auspices of the German regulator. AXA, Generali, Winterthur and Zurich offered similar pledges shortly thereafter. In March 1998, the Working Group assisted individual states with their community outreach and processing of incoming claims. Meanwhile, state insurance departments contacted survivor communities and encouraged potential claimants to submit claims and supporting documentation. Expanding the mission of New York State s Holocaust Claims Processing Office (HCPO) was an example of this effort. Originally established as a division of the state s Banking Department, under the direction of the superintendent of insurance the HCPO quickly expanded its mission to include potential insurance claims. At its meeting in Salt Lake City, in March 1998, the Working Group established a subcommittee, chaired by the California insurance commissioner, tasked with researching three areas the U.S. insurance regulators deemed priorities: claims processing, preparation of a draft memorandum of understanding (MOU) to define the role and responsibilities of the NAIC and European insurers, and first steps towards developing a national database of potential claims. The Working Group also identified a number of areas that would require further work by its members. Principally, these were: Documentation while some survivors had been able to salvage policy documents, and others had been able to reconstruct policy details such as numbers, insured sums, etc., the question of what might be established via company records needed to be addressed in greater detail. Coordination of NAIC members efforts discussion was needed to identify how best to harness the resources of NAIC s members to bring about an international commission. Valuation of policies in the absence of documentation and sufficiently detailed research, the aggregate value of policies affected was unknown. The Working Group stressed that this issue had to be addressed prior to finalizing any settlement mechanism. Heirless claims the disposition of heirless claims, and the need to trace heirs, was a major component of the discussion. Nationalization issues these issues presented by the companies would require additional research, as well as close cooperation with European governments and regulators, in an effort to understand how this might have affected companies and, consequently, individual policy claims. Memorandum of Intent April 1998 In early April, insurance regulators from New York and California, four insurers (Allianz, AXA, Generali and Zurich) and the World Jewish Congress, the World Jewish Restitution Organization and the Claims Conference met to negotiate and sign a six-point memorandum of intent (MOI). 17

19 NAIC Task Force On April 30, 1998, the NAIC voted unanimously to establish a task force of nine states to succeed the Working Group. Named the International Holocaust Commission Task Force, its specific mandate was to work towards the establishment of an international commission to resolve unpaid claims by Holocaust survivors and the heirs of Holocaust victims. 24 Reflecting the importance the NAIC ascribed to this committee, its chair was former Insurance Commissioner of North Dakota and NAIC President Glenn Pomeroy; its vice chair was New York State Superintendent Neil Levin. One of the task force s first meetings was with European insurance regulators from Austria, France, Germany, Italy and Switzerland to discuss proposed efforts to address potential claims from Holocaust victims and their heirs. There was a subsequent meeting to bring together U.S. insurance regulators and their Central and Eastern European counterparts to discuss issues related to Holocaust era insurance claims. Drafting the MOU In early May 1998, the newly created NAIC task force met in New York and consulted with representatives of Jewish groups, led by Rabbi Israel Singer of the World Jewish Congress and Roman Kent, President of the American Gathering of Jewish Holocaust Survivors. The consensus was that results should be as swift and comprehensive as possible, because for Holocaust survivors still living there was little time for further litigation or debate. The U.S. insurance regulators and Jewish groups agreed that dialogue with the companies, not confrontation, had to be the cornerstone of the proposed commission. It was understood that the issues to be tackled were not academic or abstract; they concerned the lives of real people, who lived, worked and dreamed dreams that they sought to fund in part with the purchase of an insurance policy. The core issue, as so many survivors had testified, was not about money; it was about justice. Through the summer of 1998, the U.S. insurance regulators worked with representatives of the Jewish groups and the major companies to arrive at a memorandum of understanding (MOU). Signed by the U.S. insurance regulators, six insurance companies (Allianz, AXA, Basler, Generali, Winterthur and Zurich 25 ), as well as the WJRO, the Claims Conference and the state of Israel in August 1998, it established ICHEIC with a stated goal of working by consensus, to the extent possible. Efforts were made to ensure that membership reflected a representative balance of interests. In addition to a chair, ICHEIC was composed of three members designated by the U.S. insurance regulators, two members designated by non-governmental Jewish survivor organizations, one desig- 24 The nine states that constituted the task force were California, Connecticut, Florida, Louisiana, Missouri, New York, North Dakota, Pennsylvania, and Washington. 25 The six companies represented Allianz, AXA, Basler, Generali, Winterthur and Zurich had US business interests and had been among the companies named in the various class action lawsuits filed in courts around the country. One company, Basler, left the process in the course of negotiations, and participated later not as a major ICHEIC company but only through its membership in the German insurance association. 18

20 SECTION 2 nated by the state of Israel, and six members designated by the European insurance companies and regulators. In addition, there were eight alternates: two nominated by the U.S. insurance regulators, two by non-governmental Jewish organizations and the state of Israel, and four by the European insurance companies and regulators. Five observers (three nominated by global Jewish organizations and the state of Israel, in addition to a representative from the EEC and a representative from the U.S. Department of State) rounded out ICHEIC s membership. In addition, while the MOU contemplated that the insurance regulators from Italy and Germany would join as members, they ultimately became merely observers. The original number of members was therefore 11; in May 2000, the Dutch association of insurers was added as a member. As a practical matter, while there were only 12 members of the Commission, alternates participated fully, as did others on occasion. There were times when, depending on the issue under discussion or the technical nature of the topic, there were nearly 100 people in attendance. Given the many interested parties, and the amount of high level attention, it was clear that the Commission would need a knowledgeable and prominent Chair experienced in negotiating. Lawrence Eagleburger, former U.S. Secretary of State, was selected. The companies also pushed for a European vice chair to head up the Commission s London office. The choice was Geoffrey Fitchew, a former Chairman of the Building Societies Commission in the United Kingdom, who had worked as a senior civil servant in HM Treasury, the Cabinet Office, and as a Director General for financial institutions and company law in the European Commission in Brussels. Subsequently a new vice chair, Diane Koken, then Pennsylvania Insurance Commissioner, was appointed from the U.S. insurance regulator representatives. First Commission Meeting The Commission s first meeting was on October 21, 1998, in New York City. The mission was defined early: to develop a fair and comprehensive process that would identify claimants, locate unpaid insurance policies, and assist claimants with resolving claims for such policies. ICHEIC promised a claims driven process, with relaxed standards of proof that acknowledged the passage of time and the practical difficulties inherent in locating relevant documents. ICHEIC also announced the creation of two funds, one for humanitarian purposes and another to handle nationalized claims and claims against companies no longer in existence and with no present-day successor. Once the commitment was made by relevant insurers to review and make payment on valid Holocaust era insurance policies issued to victims, Commission members were faced with the daunting task of defining how the claim process would work and the value of the policies in today s currencies would be calculated. 19